Arbeitslosenversicherung (Unemployment insurance)

Unemployment insurance is a branch of social security that provides income support to individuals who are unemployed through no fault of their own. Its main goal is to help job seekers sustain their livelihood while they look for new employment. It is part of the broader social protection system and exists in various forms across countries such as Germany, Austria, and Switzerland.

Germany

In Germany, unemployment insurance is a mandatory social insurance regulated by the Third Book of the Social Code (SGB III). It is administered by the Federal Employment Agency (Bundesagentur für Arbeit) under the supervision of the Federal Ministry of Labour and Social Affairs. It is considered a core element of Germany’s labor market policy and social security system.

Eligibility

Mandatory coverage applies to most employed individuals except those in marginal part-time work. Insurance obligations exist for people who are employed under the control and supervision of an employer. Special categories like youth in vocational rehabilitation, military service members, and prisoners assigned to work also fall under compulsory insurance. People receiving maternity benefits, sickness benefits, injury compensation, or full disability pensions may also be covered under specific conditions. Parents caring for young children under the age of three and people taking care leave are insured if they were previously covered.

Self-employed individuals and employees working outside the European Union are generally not subject to mandatory insurance but may voluntarily continue their coverage under certain conditions. Voluntary contributions are calculated based on a fictitious income and reduced for new business founders during their first two years.

Financing

Unemployment insurance is funded through contributions shared equally by employers and employees. The contribution rate as of 2023 is 2.6 percent of the employee’s gross wage. These contributions are collected through designated collection agencies and transferred to the Federal Employment Agency. Government subsidies previously helped finance non-insurance-based tasks of the agency, but these were phased out starting in 2013.

Benefits and Services

Unemployment insurance not only provides monetary compensation but also offers a wide range of labor market services. These include vocational guidance, job placement support, training subsidies, career orientation programs, integration assistance, and financial incentives for employers to retain staff. Cash benefits include standard unemployment benefits, partial unemployment benefits, training-related unemployment aid, and insolvency compensation. Unemployed individuals typically receive around 60 to 67 percent of their previous net income depending on family circumstances and the duration of employment history.

Austria

In Austria, unemployment insurance is managed by the Public Employment Service (AMS) and regulated by the Unemployment Insurance Act of 1977. It is mandatory for all employees including apprentices and freelance contractors. The contribution rate is 3 percent for employers and a progressive rate for employees based on income. Benefits include unemployment allowance, which covers about 55 to 60 percent of net income and can be followed by an emergency assistance allowance if benefits are exhausted. Sanctions apply for job refusal or voluntary resignation.

Switzerland

In Switzerland, unemployment insurance is federally regulated under the Unemployment Insurance Act (AVIG) and administered by the State Secretariat for Economic Affairs and cantonal labor offices. Contributions are 1.1 percent from both employers and employees up to a capped income. Workers must have contributed for at least twelve months within the past two years to qualify. Benefits include up to 80 percent of insured income under certain conditions and cover regular unemployment, insolvency compensation, short-time work compensation, and bad weather compensation. Services also include job search support and training programs provided by Regional Job Centers (RAV).

Historical Context

Germany introduced unemployment insurance in 1927. Before that, unemployed individuals relied on municipal welfare programs. Switzerland’s modern system was established in 1977 and Austria’s in 1920. Each country has since adjusted its programs based on economic needs and labor market developments.

European Union Context

There is no centralized unemployment insurance system at the European Union level. However, discussions continue about creating a basic EU-wide scheme to stabilize member states during economic downturns.